Product Sourcing – What Are Your Options?
Once you’ve figured out what to sell, the next step is to work out the best & most profitable way to supply it to your customers.
You have 6 main options when it comes to sourcing the product you want to sell.
- Wholesalers – Companies that import products from overseas or purchase direct from the manufacturer, then place a small mark up on them and sell in bulk to retailers.
- Manufacturers – The companies that make the items. You’ll get cheaper prices from them but they’ll probably expect you to buy in larger quantities than the wholesalers will.
- Auction houses – Companies that obtain closeout/liquidation/salvage stock from retailers, wholesalers & manufacturers.
- Drop shippers – Companies where all you have to do is sell the item – they handle all the warehousing, packaging & delivery to the person you sold it to. Requires no upfront capital to start, but drop shippers do place a mark up of 10% to 20% (sometimes even more) on the wholesale price of the item which cuts out some of your profit.
- Importing from overseas – Overseas companies (Asian, Indian etc.) can manufacture goods at unbelievably cheap prices due to a lower labour cost so providing the items are of good quality & genuine (when it comes to branded products) this can be a profitable way to source items.
- Making the product yourself.
All of these methods can work very well & be profitable depending on the products you’re selling. The only exception to this tends to be drop shipping. It is quite possible to make a reasonably good income through drop shipping providing you are selling on your own website and NOT selling in an online auction site like eBay. The eBay market is so competitive that it’s almost impossible to make any money through drop shipping there.
